Friday, February 10, 2012

Another Tax on the 99 Percent

Fri, Feb 10, 2012 at 9:52 AM

This week we told you about Governor Jerry Brown’s regressive tax plan, and how it will hurt low- and middle-income earners through a sales tax hike, but there’s another proposal vying for the November ballot that also raises taxes on the 99 Percent, and may be just as bad as Brown’s. The proposal is being pushed and financed by wealthy Los Angeles lawyer Molly Munger, and it would raise income taxes across the board, including for Californians who make as little as $14,642 a year.

Munger, like Brown, appears to be hoping that voters will approve her plan because the $10 billion in annual revenues it will produce will go directly to public education. Brown has said that if voters don’t approve his plan, which includes a sales tax hike and higher income taxes for the wealthy, he’ll have to cut education funding dramatically.

Munger

But it remains to be seen whether voters will endorse Munger’s proposal once they learn that it will raise their taxes, and is not just a tax on the rich. According to Munger’s website, her proposal would progressively raise taxes on incomes above $14,262 a year with tax hikes rising from .4 percent on low-income earners to 2.2 percent on incomes above $3.4 million annually.

Although Munger’s proposal, like Brown’s, taxes wealthier Californians at higher rates than it does for low- and middle-income earners, both proposals fail to adequately address California’s unfair tax policies. As we reported this week, a 2009 analysis by the nonpartisan Institute on Taxation and Economic Policy showed that the effective tax rate for the lowest 20 percent of wage earners in California, when counting all taxes, including sales taxes, is higher — 10.2 percent — than it is for middle-income residents (8.1 to 8.7 percent) and the One Percent (7.4 percent). While Munger and Brown’s proposals would help close that gap, both plans would still leave low-income workers paying a higher effective tax rate in California than the rich.

As we’ve noted, there’s only one tax proposal vying for the November ballot that targets the One Percent and leaves 99 Percent alone: It’s known as the Millionaire’s Tax, and it’s being sponsored by the California Federation of Teachers and the California Nurses’ Association. It’s the only true tax-the-rich plan out there right now; it would raise taxes on incomes above $1 million, but would leave everyone else’s tax rates alone.

As a result, the Millionaire’s Tax would do far more than Munger and Brown’s proposals to address California’s rob-the-poor-and-give-to-the-rich tax policies.